Professor Ronald MacDonald is a Research Professor in Macroeconomics and International Finance in the Adam Smith Business School at the University of Glasgow. His previous positions at the University were Bonar Macfie Chair of Economics (2005-2006), and the Adam Smith Chair of Political Economy (2006-2015). He has consistently ranked in the top 1% of the IDEAS/RePec ranking of economists, and was awarded an OBE in 2015 for services to Economic Policy.
We discuss his report: 'The Post Pandemic New Normal' and it's follow-up calling for a rethink about the UK economy post-covid and discuss his insights and prescription for the #CovidSpring that show some marked similarities to some of the conclusions of humane economics.
Including the need to “move away from the shareholder capitalism model” based on “short-termism and value extraction” to a “stakeholder model based on value creation” and discover that while there are string signs that some business leaders are moving in this direction that this is not being reflected in university teaching.
Other key points include:
- We need to reboot the banking sector so it helps industry and business create jobs
- Recalibrating the economy so it’s fairer for ordinary workers.
- GDP - why it's bad for us and what are the alternatives?
- The need for “a new form of social contract " as we move out of the pandemic.
- The government should “instigate a wellbeing fiscal stimulus… that has a major focus on greening the economy”. That also means “no return to austerity policies”
- Let's... spare the economy from mass unemployment and guide it on a path to a New Normal
- What might the #NewNormal look like?
- What are the alternatives / what happens if we carry on as we are?
Prof. McDonald explains the asset management has made the economy very much focused on value extraction and rent seeking rather than value creation and that this has been hugely detrimental to the UK economy, having led to short-termism in investment and failure in the UK economy including in the banking sector and finance. Where policymakers have previously thought that the shift to finance, as the basis of the economy was a good thing. It's now clearly evident that this is a dead end and we're seeing a movement away from shareholder capitalism and towards stakeholder capitalism – but without this being reflected in university teaching.
Meanwhile the pandemic is opening minds and allowing people to reprioritize and think about what kind of society we want.
More on Prof. MacDonald's work is here: https://policyscotland.gla.ac.uk/wp-content/uploads/2020/06/PSPostPandemicNewNormalRonaldMacDonald.pdf & https://policyscotland.gla.ac.uk/this-time-it-has-to-be-different/ and a useful summary here: https://www.heraldscotland.com/news/18531122.revolutionary-new-vision-post-covid-scottish-economy/
Watch the video interview at https://youtu.be/QgHqZJLzqqE
See HumaneEconomics.co for more and to join the linear-conference and network.